Friday, June 14, 2024


Dhaka Tribune

Encounter Resources back up 20% on Arunta drilling results - still preliminary

As we said, Encounter was going to be volatile given the early stage of the results

Update : 30 Jun 2023, 01:23 PM

Encounter Resources (ASX: ENR) has not, in fact, found anything out at Arunta as yet. What it is finding is evidence that there may well be something there to find. That is, the results of exploration are encouraging but not as yet certain. This is what is leading to the volatility of the share price. In the past couple of months ENR shares have been 100% and more up from their May levels, also at times only 50% up - that's the volatility we mean, as views and options change about what they're finding.

Back in May, as we said about Encounter Resources, the interest was all very preliminary indeed. Essentially, working from aerial and magnetic surveys, they were indicating that there was something out there that should be investigated. Also, that they were going to go investigate. Now we're getting the results - the very preliminary results - from the drilling, those investigations: “Encounter Resources Ltd (“Encounter”) is pleased to report the identification of carbonatites over 3.5km of strike at the Aileron critical minerals project (100% ENR) in the West Arunta region of WA.” To translate that out of mining-speak. We've found the right sort of rock. “The first diamond hole (EAL001) was completed at Hoschke and intersected a niobium-REE mineralised carbonatite which returned an assay result from a 24.8m interval of: - 16m at 0.6% N2O5 & 0.2% TREO (including 402ppm Nd+Pr) from 350m (EAL001)” Some of that right sort of rock is really, really, the right sort of rock. 

Now it might sound like we're being flippant here but we're not. Every mining adventure has to start out by finding that right sort of rock. Then confirming that it actually contains the elements being searched for. In these very initial stages it will be as here - some of that rock is really the right sort of rock. More research, as they say, is needed.

Encounter Resources share price from ASXThe point to grasp here is that the identifications have been done by handheld tools here, not accurately in a lab. Further, the results on Nb and REE are coming from one or a few samples, they're not - not necessarily - representative of the entire deposit.

The correct takeaway here is that these are encouraging results but they are not proof of an economic deposit, not by a long way. Which is what explains the volatility in the share price. Variable opinions about whether further work is going to confirm the extent and thus viability of the strike for Encounter. Or not, of course. 

Finally, we'd note those REE results are on the verge of being good but no more than that. But if co-mined with Nb then they become good. 

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